PUBLIC AND PRIVATE INVESTMENT AND ECONOMIC GROWTH: A REVIEW

Sa？etak The paper survey the existing literature on the relative impacts of public and private investment on economic growth – in both developed and developing economies, highlighting the theoretical and empirical evidence. The review finds mixed and in some cases conflicting evidence on the relative contribution of public and private investment to economic growth owing to several factors which include; methodological approach adopted, characteristics of sample country chosen, proxy variables used, and the chosen sample period. While both public and private investment is generally found to be important to the economies’ growth process, on balance, there is greater empirical support for a private investment-led economy. This review differs fundamentally from the previous studies in that it disentangles investment into public and private components and focuses on their relative impacts on economic growth. The previous reviews have not made such a distinction and have been focusing on the effect of only public investment on economic growth